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Each time the traders get a bit complacent about the market behavior it springs a nasty surprise on them: this time a journey beyond Nifty 5400 levels had been thought to be a no-brainer and longs were being created with cool confidence. The market had some other plans—it wanted to shake the traders and put them on a dose of reality check. It did that in style yesterday, whatever may be the excuse or any apparent: be it the problems of a country whose economy today might resemble the half-ruined Parthenon and its guiding deity Pallas Athena (in the form of today’s ECB) in search of a redeeming path or a more down-to-earth home grown inflation numbers raising the fear of an imminent rate hike by the central bank even before its policy meeting later this month.

In any case, most market participants are known for myopic vision and are clouded by the most recent happenings and hence overnight they have turned pretty much bearish; however, we must not forget that here in the territory of 5200s a lot of support is located.

First, 5270 is a strong support and then between 5253 and 5220 there would be ample support for the bulls. Thus, we would rather like to say that there could well be new buyers or old ones who booked their profits close to 5400.

We consider this to be a buy on declines market where things would turn in favor of the bears only if it falls below 5180 on a closing basis else buying on declines would, most likely, be more sensible. On the way up, the bulls’ ability to take it up would be put to severe test between 5318 and 5330; these levels once crossed successfully would mean renewed strength and vigor else there could selling again.

Rajat K. Bose